Commercialization of Modern Renewable Energy

The threat of global warming and its consequences are widely recognized, and the question of how to proceed with the long transition towards fossil fuel -neutral economies concerns many nations and people. At the same time the world’s primary energy use is predicted to increase significantly during the next decades as a result of global population and welfare increase. Improved energy efficiency and increased use of renewable energy sources in the world’s energy mix play important roles in the future energy production and consumption. The objective of this thesis is to study how novel renewable energy technologies, such as distributed small-scale bio-fueled combined heat and power production and wind power technologies could be commercialized efficiently. A wide array of attributes may contribute to the diffusion of new products. In general, the bioenergy and wind power technologies are in emerging phases, and the diffusion stage varies from country to country. The effects of firms’ technology choices, collaboration and alliances are studied in this thesis. Furthermore, the roles of national energy infrastructure and energy support schemes in the commercialization of new renewable energy products are explored. The empirical data is based on energy expert interviews, financial and patent data, and literature reviews of different case studies. The thesis comprises two parts. The first part provides an overview of the study, and the second part includes six research publications. The results reveal that small-scale bio-fueled combined heat and power production and wind power technologies are still in emerging phases in their life cycles, and energy support schemes are crucial in the market diffusion. The study contributes to earlier findings in the literature and industry by confirming that adequate energy policies and energy infrastructure are fundamental in the commercialization of novel renewable energy technologies. Firm-specific issues, including business relationships and new business models, and market-related issues will have a more significant role in the market penetration in the future, when the technologies mature and become competitive without political support schemes.

Applying Nordic Energy Efficiency and Renewable Energy Solutions in Kaliningrad Oblast, Russia

RENSOL (Regional Energy Solutions) project deals with the use of energy efficiency and renewable energy solutions in Kaliningrad Oblast to tackle climate change. Overall objective of the RENSOL work package 1 is to build awareness and knowledge on solutions for energy efficient buildings and street lightning applications. The project report describes available solutions to improve housing energy efficiency.

Performance Determinants of Renewable Energy Companies

The purpose of this thesis is to identify the Performance Determinants (PD) of Renewable Energy (RE) companies. It analyzes the background of the RE industry while reflecting simultaneous developments in the fossil based industries. I divided the determinants into two groups: market level and firm level and established hypotheses based on the existing literature. Data from public companies was gathered to construct a Panel Data structure. This is then tested by using a Linear Regression with Fixed Effects model. The model specification was efficient at reflecting the analyzed phenomena. My results showed that both market level and firm level determinants are significant in the RE Industry but the firm level determinants had higher explanatory power (R2). The determinants' relationships were found to follow those from the manufacturing industry more than the utilities' industry. Out of the market level determinants Consumer Price Index (CPI), Interest Rates and Oil prices were significant. Out of the firm level determinants Debt to Assets, Net Investments, Cash flows from operations, Sales and Earnings Before Interests and Taxes (EBIT) were significant. I concluded that this information is valuable for key industry players as they can achieve their objectives faster by elaborating better strategies using these results.

Entry Modes for Finnish Firms into the Zambian Renewable Energy Industry

The renewable energy industry in Zambia is poised for growth and offers many possibilities for Finnish firms willing to enter the market. The Zambian government’s deliberate policy measures aim at attracting foreign direct investment (FDI) into this sector. This study rationalises that this could be the pull factor for Finnish firms. The thesis gives an overview of the industry and investigates an appropriate mode of entry, basing its arguments on the comparison analysis of the two economies with the use of the world forum’s stages of economic development as a framework. The theoretical part of the study examines internationalisation theories, entry mode choice and factors influencing the choice. The multiple case study approach is implored, analysing four case companies from Finland with the use of extant literature on internationalisation relevant to the study. The research design involves the use of documentation, secondary data, interviews and observation. The results of the case analyses show that the Finnish firm’s most preferred entry mode initially is exporting because it is considered to be less risky. Additionally, the findings also reveal that the selection of a suitable mode of entry is dependent on the firms’ size, orientation and international experience and could therefore be considered to be subjective. Paramount is the act of gaining market knowledge. The study shows that only hydro-electrical, solar energies and biomass are by far the most used and known forms of renewable energy in Zambia, while other alternative sources still remain un-exploited thus highlighting a growth potential. However, policy formulation and the regulatory framework in the renewable energy sector were found to be wanting.

Analyzing the Effects of the New Renewable Energy Policy in Russia on Investments into Wind, Solar and Small Hydro Power

This thesis presents an analysis of recently enacted Russian renewable energy policy based on capacity mechanism. Considering its novelty and poor coverage by academic literature, the aim of the thesis is to analyze capacity mechanism influence on investors’ decision-making process. The current research introduces a number of approaches to investment analysis. Firstly, classical financial model was built with Microsoft Excel® and crisp efficiency indicators such as net present value were determined. Secondly, sensitivity analysis was performed to understand different factors influence on project profitability. Thirdly, Datar-Mathews method was applied that by means of Monte Carlo simulation realized with Matlab Simulink®, disclosed all possible outcomes of investment project and enabled real option thinking. Fourthly, previous analysis was duplicated by fuzzy pay-off method with Microsoft Excel®. Finally, decision-making process under capacity mechanism was illustrated with decision tree. Capacity remuneration paid within 15 years is calculated individually for each RE project as variable annuity that guarantees a particular return on investment adjusted on changes in national interest rates. Analysis results indicate that capacity mechanism creates a real option to invest in renewable energy project by ensuring project profitability regardless of market conditions if project-internal factors are managed properly. The latter includes keeping capital expenditures within set limits, production performance higher than 75% of target indicators, and fulfilling localization requirement, implying producing equipment and services within the country. Occurrence of real option shapes decision-making process in the following way. Initially, investor should define appropriate location for a planned power plant where high production performance can be achieved, and lock in this location in case of competition. After, investor should wait until capital cost limit and localization requirement can be met, after that decision to invest can be made without any risk to project profitability. With respect to technology kind, investment into solar PV power plant is more attractive than into wind or small hydro power, since it has higher weighted net present value and lower standard deviation. However, it does not change decision-making strategy that remains the same for each technology type. Fuzzy pay-method proved its ability to disclose the same patterns of information as Monte Carlo simulation. Being effective in investment analysis under uncertainty and easy in use, it can be recommended as sufficient analytical tool to investors and researchers. Apart from described results, this thesis contributes to the academic literature by detailed description of capacity price calculation for renewable energy that was not available in English before. With respect to methodology novelty, such advanced approaches as Datar-Mathews method and fuzzy pay-off method are applied on the top of investment profitability model that incorporates capacity remuneration calculation as well. Comparison of effects of two different RE supporting schemes, namely Russian capacity mechanism and feed-in premium, contributes to policy comparative studies and exhibits useful inferences for researchers and policymakers. Limitations of this research are simplification of assumptions to country-average level that restricts our ability to analyze renewable energy investment region wise and existing limitation of the studying policy to the wholesale power market that leaves retail markets and remote areas without our attention, taking away medium and small investment into renewable energy from the research focus. Elimination of these limitations would allow creating the full picture of Russian renewable energy investment profile.

Fundraising and investor relations in social enterprise: Marketing your way out of the pioneer gap in African off-grid renewable energy

Social enterprises apply the best of business for the pursuit of social or environmental mission while also generating revenues. Globally, nearly 1,3 billion people lack access to electricity, as well as another billion having access to only low quality and infrequent electricity. Off-grid renewable energy, like solar, will increasingly have a key role in the solution of the energy access issue. The pioneer gap in off-grid renewable energy consists of financing (or funding) gaps and capacity gaps, to do with both the early stage of the enterprises in question, as well as the early stage of the whole industry. The gaps are emphasised by specific characteristics of off-grid renewable energy business models and the requirements of operating in bottom-of-the-pyramid markets. The marketing perspective to fundraising is chosen to uncover the possible role enterprises themselves have in bridging the pioneer gap. The purpose of this thesis is to study how social enterprises operating in off-grid renewable energy in Africa utilise marketing activities in their investor relations in bridging the pioneer gap. This main research question is divided into the following sub-questions:  How does the pioneer gap affect fundraising for these enterprises?  How are the funding needs for these enterprises characterised?  How do these enterprises build trust in their investor relations? The theoretic framework is built on relationship marketing and investor relations, with an emphasis on creation of trust. The research is conducted as a thematical case study. Primary data is gathered via semi-structured interviews with six solar energy companies and two accelerators. According to the findings, the main components affecting trust-creation are diminished information asymmetry and perceived risk, mission alignment as well as a personal fit or relationship with the investor. Therefore, an enterprise can utilise e.g. the following marketing activities in their investor relations to bridge the pioneer gap: ensuring investor material, the enterprise story and presenting of them is clear, concise and complete to “package” the enterprise as an investment; taking investor needs and motivations into account as well as utilising existing investors as ambassadors.

Economic and environmental evaluation of renewable energy systems

The main objective of this thesis is to evaluate the economic and environmental effectiveness of three different renewable energy systems: solar PV, wind energy and biomass energy systems. Financial methods such as Internal Rate of Return (IRR) and Modified Internal Rate of Return (MIRR) were used to evaluate economic competitiveness. Seasonal variability in power generation capability of different renewable systems were also taken into consideration. In order to evaluate the environmental effectiveness of different energy systems, default values in GaBi software were taken by defining the functional unit as 1kWh. The results show that solar PV systems are difficult to justify both in economic as well as environmental grounds. Wind energy performs better in both economic and environmental grounds and has the capability to compete with conventional energy systems. Biomass energy systems exhibit environmental and economic performance at the middle level. In each of these systems, results vary.

Renewable energy scenarios for South Karelia – non-industrial energy demands

Tässä diplomityössä tarkastellaan täysin uusiutuvaa energiajärjestelmää Etelä-Karjalan maakunnan alueella, mikä onkin jo tällä hetkellä Suomen uusiutuvin maakunta. Diplomityössä tarkastellaan julkisen sektorin, liikenteen ja rakennusten energian kulutusta mutta teollisuuden energiankäyttö jätetään tarkastelun ulkopuolelle. Työssä tutustutaan tämän hetken Etelä-Karjalan energiajärjestelmään ja sen perusteella tehdään referenssi-skenaario. Tulevaisuuden skenaariot tehdään vuosille 2030 ja 2050. Tulevaisuuden skenaarioissa muutos keskittyy järjestelmän sähköistymiseen ja uusiutuvien tuotantomuotojen integroimiseen järjestelmään. Sähköistyminen kasvattaa sähkönkulutusta, joka pyritään kattamaan uusiutuvilla tuotantomuodoilla, lähinnä tuuli- ja aurinkovoimalla. Liikennesektori rajataan kumipyöräliikenteeseen ja sen muutos tulee olemaan haastavin ja aikaa vievin. Muutokseen pyritään liikennepolttoaineiden tuotannolla maakunnassa sekä sähköautoilulla. Uusiutuva energiajärjestelmä tarvitsee tuotannon ja kysynnän joustoa sekä älyä järjestelmältä. Työssä tarkastellaan myös järjestelmän kustannuksia sekä työllisyysvaikutuksia.

Distributed Energy Production in the North-West Region of Russia

The energy system of Russia is the world's fourth largest measured by installed power. The largest are that of the the United States of America, China and Japan. After 1990, the electricity consumption decreased as a result of the Russian industry crisis. The vivid economic growth during the latest few years explains the new increase in the demand for energy resources within the State. In 2005 the consumption of electricity achieved the maximum level of 1990 and continues to growth. In the 1980's, the renewal of power facilities was already very slow and practically stopped in the 1990's. At present, the energy system can be very much characterized as outdated, inefficient and uneconomic because of the old equipment, non-effective structure and large losses in the transmission lines. The aim of Russia's energy reform, which was started in 2001, is to achieve a market based energy policy by 2011. This would thus remove the significantly state-controlled monopoly in Russia's energy policy. The reform will stimulateto decrease losses, improve the energy system and employ energy-saving technologies. The Russian energy system today is still based on the use of fossil fuels, and it almost totally ignores the efficient use of renewable sources such as wind, solar, small hydro and biomass, despite of their significant resources in Russia. The main target of this project is to consider opportunities to apply renewable energy production in the North-West Federal Region of Russia to partly solve the above mentioned problems in the energy system.

Alternative Energy Conversion Systems for a Micro Scale Wind Turbine

This Master's thesis deals with a Micro Scale Wind Wind Turbine application. The thesis consists of nine chapters. The first chapter is an introduction to the philosophy of a small scale wind turbine application. The second defines concepts, and lists the requirements. The third presents the whole application for an On-Grid , and for an Off-Grid arrangement, with main concentration on lighting, heating, and energy storage. The fourth deals with the Inverter's technology, which are used for the conversion of the produced power. The fifth chapter presents the available storage technology and it's possibilities. The sixth deals with the system, and the technological means used for the implementation. The seventh presents the PLC device, which was used as the controller for the management of the whole application. The eighth deals with the concept and the control application philosophy that the PLC involves. And the final chapter presents conclusions and ideas for further considerations.

Strategic choices and performance – an empirical analysis of largest European and North American energy companies

Energy industry has gone through major changes globally in past two decades. Liberalization of energy markets has led companies to integrate both vertically and horizontally. Growing concern on sustainable development and aims to decrease greenhouse gases in future will increase the portion of renewable energy in total energy production. Purpose of this study was to analyze using statistical methods, what impacts different strategic choices has on biggest European and North American energy companies’ performance. Results show that vertical integration, horizontal integration and use of renewable energy in production had the most impact on profitability. Increase in level of vertical integration decreased companies’ profitability, while increase in horizontal integration improved companies’ profitability. Companies that used renewable energy in production were less profitable than companies not using renewable energy.

Choosing the optimal energy system for buildings and districts

The purpose of this master’s thesis was to develop a method to be used in the selection of an optimal energy system for buildings and districts. The term optimal energy system was defined as the energy system which best fulfils the requirements of the stakeholder on whose preferences the energy systems are evaluated. The most influential stakeholder in the process of selecting an energy system was considered to be the district developer. The selection method consisted of several steps: Definition of the district, calculating the energy consumption of the district and buildings within the district, defining suitable energy system alternatives for the district, definition of the comparing criteria, calculating the parameters of the comparing criteria for each energy system alternative and finally using a multi-criteria decision method to rank the alternatives. For the purposes of the selection method, the factors affecting the energy consumption of buildings and districts and technologies enabling the use of renewable energy were reviewed. The key element of the selection method was a multi-criteria decision making method, PROMETHEE II. In order to compare the energy system alternatives with the developed method, the comparing criteria were defined in the study. The criteria included costs, environmental impacts and technological and technical characteristics of the energy systems. Each criterion was given an importance, based on a questionnaire which was sent for the steering groups of two district development projects. The selection method was applied in two case study analyses. The results indicate that the selection method provides a viable and easy way to provide the decision makers alternatives and recommendations regarding the selection of an energy system. Since the comparison is carried out by changing the alternatives into numeric form, the presented selection method was found to exclude any unjustified preferences over certain energy systems alternatives which would affect the selection.

Developing markets of energy biomass – local and global perspectives

The thesis explores global and national-level issues related to the development of markets for biomass for energy. The thesis consists of five separate papers and provides insights on selected issues. The aim of Paper I was to identify methodological and statistical challenges in assessing international solid and liquid biofuels trade and provide an overview of the Finnish situation with respect to the status of international solid and liquid biofuels trade. We found that, for the Finnish case, it is possible to qualify direct and indirect trade volumes of biofuels. The study showed that indirect trade of biofuels has a highly significant role in Finland and may be a significant sector also in global biofuels trade. The purpose of Paper II was to provide a quantified insight into Finnish prospects for meeting the national 2020 renewable energy targets and concurrently becoming a largescale producer of forest-biomass-based second-generation biofuels for feeding increasing demand in European markets. We found that Finland has good opportunities to realise a scenario to meet 2020 renewable energy targets and for large-scale production of wood-based biofuels. The potential net export of transport biofuels from Finland in 2020 would correspond to 2–3% of European demand. Paper III summarises the global status of international solid and liquid biofuels trade as illuminated by several separate sources. International trade of biofuels was estimated at nearly 1 EJ for 2006. Indirect trade of biofuels through trading of industrial roundwood and material by-products comprises the largest proportion of the trading, with a share of about two thirds. The purpose of Paper IV was to outline a comprehensive picture of the coverage of various certification schemes and sustainability principles relating to the entire value-added chain of biomass and bioenergy. Regardless of the intensive work that has been done in the field of sustainability schemes and principles concerning use of biomass for energy, weaknesses still exist. The objective of Paper V was to clarify the alternative scenarios for the international biomass market until 2020 and identify the underlying steps needed toward a wellfunctioning and sustainable market for biomass for energy purposes. An overall conclusion drawn from this analysis concerns the enormous opportunities related to the utilisation of biomass for energy in the coming decades.

Development of a measuring-control system for energy monitoring in low power

In this thesis a control system for an intelligent low voltage energy grid is presented, focusing on the control system created by using a multi-agent approach which makes it versatile and easy to expand according to the future needs. The control system is capable of forecasting the future energy consumption and decisions making on its own without human interaction when countering problems. The control system is a part of the St. Petersburg State Polytechnic University’s smart grid project that aims to create a smart grid for the university’s own use. The concept of the smart grid is interesting also for the consumers as it brings new possibilities to control own energy consumption and to save money. Smart grids makes it possible to monitor the energy consumption in real-time and to change own habits to save money. The intelligent grid also brings possibilities to integrate the renewable energy sources to the global or the local energy production much better than the current systems. Consumers can also sell their extra power to the global grid if they want.